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Economic Rivals Given “Go-Ahead” to Destroy Rest of Domestic Manufacturing by Bush’s Stand on Trade
Trade Alert.us ^ | 1/30/04 | William Hawkins

Posted on 01/31/2004 2:47:00 PM PST by madeinchina

In his State of the Union message, President George W. Bush devoted only a single sentence to international trade: “My administration is promoting free and fair trade to open up new markets for America's entrepreneurs and manufacturers and farmers -- to create jobs for American workers.” With the country facing another record trade deficit around $500 billion, the dollar losing between 20 percent and 40 percent of its value against other major currencies in the past two years, and some 3 million jobs being lost in the manufacturing sector since 1997, the trade issue deserved much greater attention. Indeed, the Bush Administration had unveiled a new Manufacturing Strategy only days earlier. But failure to call for Congressional action to implement the new strategy enhanced perceptions that the White House was not really taking the issue seriously. Consider the use of the empty phrase “free and fair trade.” Not since the Portuguese inaugurated the modern global economy by shooting their way into the Indian Ocean to grab control of the Asian spice trade five centuries ago, has anyone been successful by an adherence to “free and fair trade.” Instead, they have played to win by using every advantage they could find or create. No one wants a “level playing field” if they can gain a “home field advantage” tilted in their favor. Indiana University professor William R. Thompson has spent his career analyzing international competition in all its forms. He has found that “waves of political leadership, order and large-sale violence [are] closely linked to processes of long-term economic growth.” Yet, he has observed that among too many analysts and policymakers “this set of activities remains underappreciated despite its close links to some of the most vicious wars of the past half-millennium and the political-economic restructuring that occurred in the midst and the aftermath of these contests.” This lack of interest is certainly evident among top U.S. decision makers. The idea that trade should be “free” of government involvement or simply made “fair” without concern for the outcome, implies that either trade is of too little consequence to require state supervision – a clearly disingenuous and thus untenable position, or that private “market” results will automatically provide the best outcome for society. It is this last notion about a benevolent “invisible hand” that has paralyzed U.S. policy. It is the wishful thinking of liberalism masquerading as theology. It has two basic tenets. First, the world is basically a harmonious place where conflict can be avoided by a mutually beneficial division of labor that integrates the world. Second, the division of labor can best be managed by private enterprise pursuing its own ends without being held accountable for any larger consequences. The noted realist thinker E. H. Carr demolished the harmony thesis by observing that the division of labor seldom creates a world of equals. Instead, there are “haves” and “have nots” or as foreign policy experts denote them, “satisfied” and “unsatisfied” powers, with the latter group bent on overturning the status quo in order to improve their place in the world. This unequal division is revealed in the classic example used by David Ricardo to teach the principle of comparative advantage: the cloth-wine trade between England and Portugal. In this example, the Portuguese should accept England’s lead in the industrial revolution, which in Ricardo’s day was best represented by the mass production of textile goods, and be content to export wine to pay for imported manufactured items. Portugal should not seek to industrialize itself to compete with England. This lesson quickly earned the title “free trade imperialism” as it would condemn Portugal, or any non-industrial society, to subservience. It should be recalled that one reason the American colonies revolted against England was that they did not like their assigned place in the imperial division of labor. The independent United States became an industrial competitor of the British Empire and eventually surpassed it. Reports from the recent World Economic Forum held in Davos, Switzerland indicate that a host of powers are working in the same way to undermine America’s economic leadership and overthrow its status as the only global superpower. Zhu Min, general manager and economic adviser at the Bank of China, predicted his country will become the main challenger to U.S. economic power, surpassing Japan to become the world’s second largest economy by 2020. Russian Finance Minister Alexei Kudrin said his country “has economic potential comparable with the United States.” Brazil is also making a bid. It led the block of developing nations in opposition to the U.S. agenda, bringing to an impasse the Doha Round World Trade Organization talks. Under left-wing president Luiz Inacio Lula da Silva, Brazil is forging closer ties with China. And India’s leaders are very sensitive to any implication that they are not keeping up with the ambitions of the other rising nation-states. Thompson’s research shows that “commercial challenges are aimed immediately at the leading commercial power.” In today’s case, that means the rich American market is the target, and domestic American firms are to be swept away in the struggle for economic dominance. Private firms are unable to meet this challenge on their own. Domestic American firms cannot stand against overseas rivals backed by their governments, who use all the tools and tactics learned from centuries of trade warfare. Many of the largest “American” firms in leading industries now see themselves as being “transnational” and owing no allegiance to the United States. This means they have been easy converts to the mercantile strategies of the rising states. Washington needs to take action to rein in these global mercenaries and channel their energies back to the advancement of American economic preeminence. In his study The Emergence of the Global Political Economy, Thompson warns of the cost of inaction: “If the declining leader’s deteriorating position accelerates due to its own choices, perceived vulnerability will increase and so, too, will the scope of the challenger’s attack.”


TOPICS: Business/Economy; Editorial
KEYWORDS: economicrivals; manufacturing; stateoftheunion; trade
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To: ClintonBeGone
The goods are not the question.

As it stands now, the working definition of 'free trade' is that US Trade Policies (under WTO/NAFTA rules) allow manufacturers to sell their goods in the USA--which is fine, except that the manufacturers are NOT 'indigenous' Chinese, Indian, Filipino, or Mexican firms.

Instead, they are often transnationals whose operation in China (or the others) was set up as a method of avoiding US tax, regulation, or labor costs.

IOW, (and let's not get into a discussion about 'lazy, fat, yada yada Americans--not productive...) the United States, over a period of 100+ years, has created social structures which provide for good working conditions and relatively high pay, in addition to providing for ecological and tax revenues which fund the infrastructure.

Companies find these structures to be costly (and we can agree that they ARE costly.) In order to avoid the costs, they move. This is 'unrestricted capital' at work.

What happens, of course, is that numbers of workers in the US get dumped--as well as their managers, their (former) company's suppliers, etc., etc., etc.

It's not a matter that JoeBlow did a lousy job--and, by the way, in most cases, JoeBlow's production and quality numbers were as good as (or better than) those coming from offshore plants. It's a matter of US Trade Policy. For some reason or other, the US has decided to ignore conditions in other countries which would trigger massive interventions (OSHA, EEOC, EPA--you name it) here in the US.

That's only the beginning. The US also doesn't have a good track record of protecting Intellectual Property (patents/copyrights) in foreign countries, either.

Ironically, then, the firms which are currently manufacturing products in China, (the worst IP violator) will find themselves put out of business by the very country which they thought was their savior.

Completes the cycle, eh?

If it were black-and-white, it wouldn't call for much discussion. It's not that simple.

In the end, however, the Preamble clearly states that one of the functions of Gummint is 'to provide for domestic tranquility...and life, liberty, etc....' meaning that the only defense (and this IS a war) is within not only the power of the Feds, but within their specific charter.
201 posted on 02/02/2004 9:26:13 AM PST by ninenot (Minister of Membership, TomasTorquemadaGentlemen'sClub)
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To: KC_for_Freedom; Reaganwuzthebest
(Note the steel tariff that had to be reconsidered, of course that may be making your point since it was the threat of trade sanctions that forced us to relent. )

The steel tariff problem was created by the Feds because they can't think past the end of their nose.

The Feds did NOT slap a tariff on 'fabricated steel products,' meaning that domestic fabricators got killed by foreign fabricators--because the foreigners simply fabricated the steel before sending it here.

Meantime, our domestic fabricators paid the higher price for raw steel--and became non-competitive.

Maybe that's why the Sec/Treasury was canned, eh?

202 posted on 02/02/2004 9:39:46 AM PST by ninenot (Minister of Membership, TomasTorquemadaGentlemen'sClub)
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To: Viva Le Dissention
As China becomes more capitalist, it will become more free.

By that token, this argument is also true:

As the United States becomes more socialist, it will become less free.

Correct?

203 posted on 02/02/2004 11:55:30 AM PST by superloser (Tancredo 2004)
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To: ninenot
Maybe that's why the Sec/Treasury was canned, eh?

O'neil was said to have never supported cutting taxes. And made it clear he disagreed with the boss. Hence he was canned. The steel tariffs were intended to help US steel raw manufacturers, and did until the French and the rest of Europe said they would fight us with broad general tariffs of their own, and we did not want a trade war during the 2004 elections, so we backed down.

204 posted on 02/02/2004 12:06:16 PM PST by KC_for_Freedom (Sailing the highways of America, and loving it.)
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To: ClintonBeGone
Words like these can only find germination in the mind of a selfish, lazy government or union worker who's never tasted the slighted success.

You are either a troll, or have never worked a day in your life. How's the trust-fund?

Given contract law, can you explain how the courts are constantly filled with people suing others over breeches of contract that was formed under the aegis of "free-trade"? This is part of the overwhelming empirical evidence that exists to demonstrate that "Free Trade" is only an academic subject that totally ignores human nature and pretends that which is demonstrably false - that people are inherently good and always seeking perfect morality.

205 posted on 02/02/2004 12:17:45 PM PST by Dr Warmoose
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To: Dr Warmoose
Legal contracts are formed, and breaches of contract occur, regardless of trade policy.
206 posted on 02/02/2004 12:21:37 PM PST by 1rudeboy
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To: 1rudeboy
I'm still waiting for your proof that real wages have been increasing - seems that you can't. Exactly who is the prevaricator?
207 posted on 02/02/2004 1:42:11 PM PST by sarcasm (Tancredo 2004)
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To: Dr Warmoose
Given contract law, can you explain how the courts are constantly filled with people suing others over breeches of contract that was formed under the aegis of "free-trade"?

What an ignorant question. You can bet if I promised you a case of your prozac in exchange for an amount equal to your welfare or disability check and you didn't pay me, I would sue. A contract is actually PART of the entire trade process. Are you really the best your side has?

208 posted on 02/02/2004 1:54:48 PM PST by ClintonBeGone (<a href="http://www.freerepublic.com/~clintonbegone/">Hero</font></a>)
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To: KC_for_Freedom
Perhaps.

The steel tariffs were also short-sighted in their application and hurt far more people (by Gummint stupididy) than they helped. See my above post.

ONeill is an all around jerk--but, by coincidence, his last position before SecTreas was CEO of Alcoa. Hmmmmmmm.
209 posted on 02/02/2004 2:08:51 PM PST by ninenot (Minister of Membership, TomasTorquemadaGentlemen'sClub)
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To: ClintonBeGone
What an ignorant question.

Whatever you feel it is, you were still unable to understand it or answer it. But that's OK, it is perfectly normal for those who who don't have answers to lash out with insults.

Let's say that we had your hypothetical Prozac/welfare check contract, and I didn't pay you. Isn't that indicative of the true problem in free trade? Apparently you are unable to recognize that it is a moral failure that causes breakdowns in trade. If I paid you the welfare check, and in turn you withheld the Prozac, then one needs to wonder why you did. If you supplied the Prozac without taking payment at the time of the trade, and I took advantage of your naivete by withholding payment then I would have an advantage in that I would have the Prozac and use of the welfare check.

This is typical of every breakdown in free trade. One side is trying to get more out of the deal than the other. Since you are completely unable to see this, please meet me with a case of Prozac, and let me prey upon your gullibility. I will bring the title to the Brooklyn Bridge in fair trade.

210 posted on 02/02/2004 2:19:29 PM PST by Dr Warmoose
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To: Dr Warmoose
Any failure in the transaction is the responsibility of the parties involved. Is that difficult to understand or require some sort of government warning lable? I feel like talking to someone that doesn't understand why the sun rises in the east.
211 posted on 02/02/2004 2:29:56 PM PST by ClintonBeGone (<a href="http://www.freerepublic.com/~clintonbegone/">Hero</font></a>)
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To: ClintonBeGone
Any failure in the transaction is the responsibility of the parties involved.

So now you see. Good.

Is that difficult to understand or require some sort of government warning lable?

Now move your eyes from the tree bark and look at the trees and the forest. Government attracts the worst of the ne're do wells who want the power and the money without actually having to earn it. That is why free trade won't ever happen. If you are a government agent who has the power to make or break companies and you are approached by someone who is looking for an advantage over his competitor, and by regulatory force you can profit both yourself and your benefactor, what is keeping you? This love affair with free-trade?

Back out further and now you understand why George Bush put tariffs on steel.

I feel like talking to someone that doesn't understand why the sun rises in the east.

You are projecting. But that's OK, I expect that.

212 posted on 02/02/2004 2:51:26 PM PST by Dr Warmoose
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To: sarcasm
I refer you to my #95. Again.
213 posted on 02/02/2004 4:15:58 PM PST by 1rudeboy
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To: Dr Warmoose
I will bring the title to the Brooklyn Bridge in fair trade.

Splitting hairs I know, but the buyer would not sue you for breach of contract in this case, because unless you legally have title to the bridge, a valid contract for its sale has not been formed in the first place.

214 posted on 02/02/2004 4:24:14 PM PST by 1rudeboy
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To: Dr Warmoose
Government attracts the worst of the ne're do wells who want the power and the money without actually having to earn it. . . .If you are a government agent who has the power to make or break companies and you are approached by someone who is looking for an advantage over his competitor, and by regulatory force you can profit both yourself and your benefactor, what is keeping you?

But for some of your more unintelligible mutterings, and your absolutely poor attitude, I could swear we both agree with the goal of maximizing trade opportunities.

215 posted on 02/02/2004 5:03:11 PM PST by ClintonBeGone (<a href="http://www.freerepublic.com/~clintonbegone/">Hero</font></a>)
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To: 1rudeboy; Dr Warmoose
Splitting hairs I know, but the buyer would not sue you for breach of contract in this case, because unless you legally have title to the bridge, a valid contract for its sale has not been formed in the first place.

Doesn't it just kill ya that you have to explain to presumed adults such elementary concepts such as what elements constitute a valid contract? Dr Warmoose? It's more like talking to Dr Seuss.

216 posted on 02/02/2004 5:05:43 PM PST by ClintonBeGone (<a href="http://www.freerepublic.com/~clintonbegone/">Hero</font></a>)
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To: KC_for_Freedom
In general the practice of trade protectionist practices should be for specific objectives and time limited because otherwise our industries will loose their competitiveness and after that happens, protectionism will drag us down to the European model of high taxes and government provided socialism.

It's not about practicing protectionism for the sake of it or as a matter of routine, but only as a last resort. So your statement above I agree with fully.

China is undercutting our workers and dumping on our markets. I think tariffs on their imported products at this point is more than justified. They can threaten retaliatory action all they want, they're hardly buying anything from us anyway.

217 posted on 02/03/2004 5:49:23 AM PST by Reaganwuzthebest
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To: Batrachian; ClintonBeGone
11 -

""Who exactly is 'forcing' them? If they can't compete, close up shop and sell the real estate for a new subdivision."
Do you think that bankruptcy is a good substitute for prudent trade policy? If so, you have a lot of company."

I'll bet that we can recruit many Indians or Chinese to become Americans to replace ClintonBeGone and others like him, at a much cheaper price. What an idea - !!!

218 posted on 02/21/2004 4:52:20 AM PST by XBob
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To: Don Corleone
Statement: "...Nobody makes whale oil lamps anymore..."

Response: They work at McDonald's.

219 posted on 02/21/2004 5:02:59 AM PST by AEMILIUS PAULUS (Further, the statement assumed)
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To: ClintonBeGone
CBG - Just how many of your friends and neighbors are involved in manufacturing or construction?

About 95% of mine are. Have you ever even met a manufacturing or construction worker?

You sound like you are a primitive carnivore, who can only prey on the work of others.
220 posted on 02/21/2004 5:09:38 AM PST by XBob
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